In a fair value measurement, the fair value of a liability reflects the effect of nonperformance risk. This is the same under ASC 820 and IFRS 13. ASC 820 assumes that nonperformance risk is the same after the liability is transferred as before.
Consider a hypothetical example in which Company P has a liability that pays 1 million yen in one year. If the discount rate, including the credit spread, is 2%, the fair value is about 0.9804 million yen. If Company P's creditworthiness falls and the rate becomes 3%, the fair value drops to about 0.9709 million yen, a decrease of about 0.0095 million yen. For a liability whose fair value changes go through profit or loss, this amount is a gain for Company P. ASC 820 allows the effect of credit standing to be reflected either in the discount rate or in the estimate of future cash flows.
For derivatives, the adjustment that reflects the firm's own nonperformance risk in the value is DVA. The adjustment that reflects the counterparty's credit risk is CVA.